The Strategic Investment Program (SIP) was adopted by the Oregon Legislature in 1993. It allows businesses and local governments to negotiate alternative property taxing agreements if these businesses are willing to invest at least $100 million at an urban site or at least $25 million at a rural location in Oregon. The purpose of this program is to attract and keep companies that provide good jobs in Oregon, particularly capital-intensive, high-technology employers.
Intel SIP Agreements
Washington County, the City of Hillsboro and Intel Corporation reached an agreement in 2014 to provide an alternative property taxing structure for qualified Intel investment under Oregon's SIP laws.
The 2014 Intel-Washington County SIP agreement is the fifth since the program's inception. Two SIP agreements were approved in 1994, a third in 1999 and a fourth in 2005. The two 1994 agreements granted an alternative property tax structure for qualified Intel investment of up to $3 billion. The 1999 agreement took a similar approach for qualified Intel investment up to $12.5 billion between the tax years 2000-01 and 2014-15. The 2005 agreement continued the taxing arrangement for potential Intel investment in Oregon of up to $25 billion over 15 years.
The 2014 agreement provides a framework for potential Intel investment in Oregon of up to $100 billion over a 30-year period. The 2014 SIP agreement requires Intel to make payments under two categories, those required by state law and those negotiated locally. The statutorily required payments would total to an estimated $122 million in property taxes and fees over the life of the agreement. Additional fees would total to an estimated $228 million over the same period. Actual amounts would vary depending on how much and over what timeline Intel invests.
The agreement follows a precedent established with other Washington County SIP agreements of requiring fees equal to full property taxes on all land and buildings. These fees have consistently resulted in payments that were greater than the minimum required under Oregon's SIP law. SIP agreements with Intel have allowed for property tax savings to Intel for investment in machinery and equipment used for semiconductor manufacturing. This machinery and equipment costs billions of dollars to create and can become obsolete within two-to-three years.
Genentech SIP Agreement
The 2006 SIP agreement among Washington County, the City of Hillsboro and Genentech, Inc., is for a maximum investment of $250 million. The exemption period began in 2010 and will extend for 15 years. Each year that Genentech receives a SIP property tax exemption, it shall pay a Community Service Fee not to exceed $500,000 in any tax year, and additional negotiated payments totaling approximately $7.6 million over the 15-year period.